RI Gay State Workers Hit With Massive Back Tax Bill

[davidinalameda]

http://www.365gay.com/Newscon06/01/011906riBens.htm

Hundreds of domestic partners of Rhode Island state employees have been hit with massive tax bills.

The legislature extended health and insurance benefits to the domestic partners of state workers in 2001. Now, more than 200 letters have gone out from the state to workers telling them that those benefits are considered taxable income by the IRS.

Some workers owe up to five years in back taxes that the state forgot to collect through payroll deductions.

Beverly Najarian, the state director of administration, tells WJAR television news that when the legislation was written there was no provision for the state to deduct the the tax on the benefits, and until now no one noticed the discrepancy.

[Egalitariat]

1. Did the state report the income on W2s?****

nm

[f-bush]

2. If I was those people

I would sue the State for the cost of the taxes due to the States dereliction of duty!

[DBoon]

3. but benefits for married couples ARE tax deductible?

if so, another case of the feds pushing their reactionary agenda onto the states.

[sui generis]

4. they need to sue

it's tantamount to a federal disincentive to pursue their rights under state law, and one HUGE other thing:

Uninsured people pay a different rate than insured people for different procedures and medication. So even though they may have had, say, a gallbladder surgery that cost $10K on their partner's insurance it would have only cost $7K paying cash after W-2, while the opposite is true for most medicine. If the government isn't taxing the full cost benefit at the individual non-insured level, it's making a claim of income that wouldn't have been income had they had to pay taxable income without insurance. Furthermore, if such a cash payment for procedures and medicine had been made without "income" from the insurance benefit, it's possible in some cases that it could have been itemized and changed their tax return, which doesn't appear to be taken into account either.

I'm not a lawyer but I'm sure it's a point that could be made in court.